Monday, May 25, 2009

On May 20, President Obama signed a law the Helping Families Save Their Homes Act of 2009. The law expands the reach of the Administration’s Making Home Affordable Programs, improves the Federal Housing Administration’s Hope for Homeowners program and streamlines how HUD supports thousands of homeless support programs across America. Also important to CD investors is the law includes provisions that extend the $250,000 FDIC & NCUA deposit insurance limit to December 31st, 2013.

Last year when the financial crisis began, FDIC and NCUA deposit insurance was temporarily increased from $100,000 to $250,000 until the end of this year to help the banks. The bulk of the the "Helping Families Save Their Homes Act of 2009" bill dealt with mortgages and foreclosures, so higher deposit insurance took a back seat in terms of limelight.

If $250,000 of coverage isn't enough and you don't feel like opening up numerous bank accounts, then you can always $50 million in FDIC insurance through the CDARS program but that comes at a price.

Saturday, May 16, 2009

On Friday, May 15, 2009 GMAC Bank renamed itself "Ally Bank." This has the appearance of distancing itself from government bailouts and its connection to General Motors (GM) which may go bankrupt soon.

Reuters reported:

GMAC LLC, stung by billions of dollars in losses at its auto finance and mortgage units, on Friday scrapped its own name from its banking unit, which it will now call Ally Bank in an effort to gain customers.

Sanjay Gupta, the bank's chief marketing officer, said the company wanted a name that would help it shed the baggage that many Americans now associate with banks, which have taken hundreds of billions of dollars of taxpayer money after losses from bad loans and investments piled up.

"We fully expect more customers will use us," Gupta said in an interview.

GMAC's conversion to a bank holding company in December was a central part of the Detroit-based company's survival plan, and allowed it to get access to new government funding.

While GMAC got a $6 billion bailout in December, including $5 billion from the Troubled Asset Relief Program, regulators ordered it last week to plug an $11.5 billion capital shortfall to protect itself in case of a severe recession.

Nineteen large banks underwent government "stress tests," and of the 10 told to raise capital, GMAC had by far the biggest shortfall relative to its size"

With that sort of negative stigma, you can see the rush to change their name.

From the Ally Bank web site:

Who we are: "We are Ally Bank, built on the foundation of GMAC Financial Services. And with that experience we’ve learned that these times demand change and a new way of doing business. So we’re taking banking in a new direction."

Lets hope the "new direction" includes responsible lending to people who can pay back the loans.

Definition: LIBOR is the London Interbank Offered Rate. It is a daily reference rate based on the interest rates banks in the London wholesale money market (or interbank market) offer to lend unsecured funds to each other. LIBOR is usually slightly higher than the London Interbank Bid Rate (LIBID). LIBID is the rate the same banks are prepared to accept deposits.

Congress has temporarily increased NCUA share insurance from $100,000 to $250,000 per depositor through December 31, 2009.

Your Pentagon Federal Credit Union deposits are insured to at least $250,000 and backed by the full faith and credit of the United States government. National Credit Union Administration, a U.S. Government agency. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.